Zero copayment for generic statins could save billions

April 14, 2013

For every 10 percent increase in the use of generic, rather than brand-name, statins, Medicare costs could be reduced by about $1 billion annually. These would be direct Part D savings achieved via the price difference between the brand and generic, according to John F. Hoadley, PhD, a health policy analyst at the Georgetown University Health Policy Institute and lead author of a study in Health Affairs that makes this point. However, the saving that might accrue from the health benefits of statins is not part of this particular calculation, says the study. The researchers further point out that private insurers could apply a zero copayment approach to generic drugs, increase their use, and lower their costs.

The researchers observed that adherence is higher when patients take the less expensive generics. To the extent that adherence increases after patients make the switch, there is the potential for further savings.

The study looked at 2008 data to see whether cost sharing and utilization management influence use of generic statins. This class of drug was chosen because it is one of the most-prescribed drug classes, used by 44 percent of Medicare beneficiaries, and studies have found that it doesn’t ­really matter which statin is prescribed to patients not at high risk.

After the researchers compiled data on the estimated effect of generic drug and branded drug copayments and on utilization management techniques (prior authorization and step therapy), they created five possible drug plans. Plans A and B have no copayment for generic drugs but differ in their treatment of brand-name drugs and use of step therapy. Of the three plans with copayments for generic drugs, plan E has the lowest copayments for Lipitor and Crestor, and plan D requires prior authorization.

Predicted rates of generic use for beneficiaries in the five plans range from 51 to 88 percent. This range is similar to the actual range of generic use for prescription drug plans in 2008, the researchers say.

Plan A has the largest spread between generic and brand-name copayments and achieves the highest predicted rate of generic use. The lowest predicted rates are for plans C and E, which combine generic copayments with relatively low copayments for popular brand-name drugs and have no utilization management requirements.

Predicted rates of use for generic statins

Copayment

Plan

Generic drug

Lipitor

Crestor

Other brand-name drug

Prior authorization

Step therapy

Predicted generic use

A

$0

$115

$99

$126

No

No

88%

B

0

34

30

126

No

Yes

62

C

7

30

75

75

No

No

59

D

10

43

26

26

Yes

No

73

E

7

24

93

93

No

No

51

Source: Hoadley JF, Merrell K, Hargrave E, Summer L. In Medicare Part D plans, low or zero copays and other features to encourage the use of generic statins work, could save billions. Health Aff. 2012;31(10);2266–2275.